Tuesday, October 8, 2013

RR 12-2013 on Mandatory Withholding in Philippines

Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 12-2013 dated July 12, 2013 (RR No. 12-2013) amending Section 2.85.5 of Revenue Regulations No. 2-98 (RR No.2-98), as amended, relative to the requirements for deductibility of certain income payments.

Under RR No. 12-2013, no deduction shall be allowed on income payments if it is shown that the applicable withholding taxes required by  the rules had not been withheld. No deduction will also be allowed even if during tax assessment on deficiency withholding taxes for alleged failure to withhold, the taxpayer paid the withholding taxes.

In effect RR No. 12-2013 makes it mandatory for taxpayers to withhold on expenses required to be withheld for purposes of expense deduction for income tax purposes in the Philippines. For easy reference, please refer below to the copy of Revenue Regulations No. 12-2013 from the BIR website.

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RR No. 9-2013 on Tax Compromise Fee in Philippines

The Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 9-2013 dated May 10, 2013 (RR No. 9-2013) amending Revenue Regulations No. 30-2002 (RR No. 30-2002) relative to the amount of compromise payment of deficiency internal revenue taxes.

In the past under RR No. 30-2002, the rule was to apply for compromise of deficiency taxes under any of the following and upon approval, the compromise amount shall then be paid:

  • Minimum amount of 40% of basic tax due based on doubtful validity; or
  • Minimum amount of 10% of basic tax due based on financial incapacity.

Under RR No. 9-2013, the compromise offer shall be paid by the taxpayer upon filing of the application for compromise settlement and the application for compromise shall not be processed unless the compromise amount is paid. In case of disapproval of the application, the amount paid shall be deducted from the total outstanding tax liabilities.

Please see below Revenue Regulations No. 9-2013 for easy reference.


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Friday, February 1, 2013

BIR RR No. 1-2013 mandated EFPS of Government Agencies

REVENUE REGULATIONS NO. 1-2013 (RR No. 1-2013) issued on January 23, 2013 further expanded the coverage of taxpayers required to file tax returns and pay taxes through the Electronic Filing and Payment System (eFPS) to include National Government Agencies (NGAs) mandatorily required to use the Electronic Tax Remittance Advice (eTRA).

Accordingly, the following taxpayers are already mandated to make use of the eFPS:

a. Large Taxpayers duly notified by the Bureau of Internal Revenue (BIR);
b. Top 20,000 Private Corporations duly notified by the BIR;
c. Top 5,000 Individual Taxpayers duly notified by the BIR;
d. Taxpayers who wishes to enter into contract with government offices;
e. Corporations with paid-up capital stock of Ten Million Pesos;
f. PEZA-registered entities and those located within Special Economic Zones; and
g. Government Offices, in so far as remittance of withheld VAT and business tax is

RR No. 1-2013 is issued to further regulate the electronic filing of Tax Remittance Advice (TRA) of the National Government Agencies (NGAs) through the Electronic Tax Remittance Advice (eTRA), a sub-system of the eFPS. 

  • The Bureau of Internal Revenue (BIR) shall issue a Notification Letter to all Government Agencies, including their branches and extension offices located nationwide which have their own disbursement functions to inform them about the mandatory requirements. For the purpose, the Head Office of the National Government Agency shall provide the list of its branches/ field or extension offices which have their own reimbursement function.
  • Those NGAs notified shall enroll with the eFPS facility and enroll with the Authorized Agent Bank.
  • Upon successful enrollment, file and pay taxes through the eFPS.

As to other taxpayers not listed above, they may register for electronic filing and payment system at their option. Please refer below for the copy of RR No. 1-2013 for easy reference.

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